Lies, Damn Lies and Jobs Numbers, Canada Edition

A healthy labor market is perhaps the single most important indicator of a government's economic success. It's also one of the most susceptible to rhetorical shenanigans, usually through the presentation of raw numbers, the bigger the better, often devoid of context. Take Canada, where economic headwinds have made the current government's record a matter of some dispute.

Last October, former Canadian Finance Minister Jim Flaherty boasted of "more than 1 million jobs created since the depth of the global recession." That one phrase neatly encapsulates the dangers of letting political parties choose which indicators to use in a debate about the economy.

To start, the statement uses a period that will produce the biggest number of jobs, does not say what that period was, ignores how many were lost in the prior period, and fails to distinguish between full-time, part-time and contract employment. Then there is the attempt to dazzle with big numbers: Is a million a lot? How many jobs does the country usually generate over a similar period?

Canada's Conservative government has long made sound economic management the centerpiece of its claim to office. Now, with the country's outlook showing mixed signals and a federal election coming next year, I'm looking at ways to measure the health of the economy, and what each says about Canada's.

The last installment examined gross domestic product, an area where Canada used to beat the average among Organization for Economic Cooperation and Development nations but is starting to slip. A debate over the economy can't stop there; GDP is one indicator among many, and probably the least tangible in citizens' daily experiences.

A more relevant gauge for most people is the state of the labor market. That data shows that the government's claims about strong job growth, like Flaherty's above, are more than a little misleading.

A slightly better measure is the unemployment rate. Of the seven years after the Conservatives took office, Canada's unemployment rate was higher than the OECD average for four years and lower for three. The latest year for which the OECD has released cross-country figures, 2012, shows Canada beating the OECD average by 0.9 percentage points.

But even that isn't terribly enlightening: The unemployment rate fails to measure people who have stopped looking for work. Is there a better way to assess the health of the job market under the current government? Start with the employment-to-population ratio -- the percentage of working-age Canadians who have a job. Instead of cherry-picking a time period, let's start at the beginning of the Conservatives' time in office.

When Stephen Harper became prime minister in 2006, 72.8 percent of working-age Canadians had a job. That fell during the recession, as it did across most of the developed world. What's more concerning is that as of 2012, that level was still 1.4 percentage points short of its pre-recession peak -- and more than half a point short of when Harper took office.

Now look at one of the most vulnerable populations in a shaky labor market: young workers. The year the Conservatives took office, 11.7 percent of those age 15 to 24 were unemployed. That rate peaked at 15.2 percent in 2009, and has hovered above 14 percent since then.

Finally, let's look at the share of Canada's unemployed who've been without a job for 12 months or more. Before the recession, just 7.1 percent of the jobless were the long-term unemployed. That figure remains above 12 percent.

The lesson here is that no single statistic does a good job of showing the health of the labor market. When a political party brags about the number of jobs created on its watch -- as the Conservatives are bound to in the next election campaign -- be wary.

(Christopher Flavelle is a member of Bloomberg View's editorial board. Follow him on Twitter at @cflav. This post is adapted from an article published in the April edition of the Literary Review of Canada.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

Christopher Flavelle writes editorials on domestic policy, including health care, energy and environment, education and retirement. He was a senior policy analyst for Bloomberg Government and chief speechwriter for the leader of Canada's Liberal Party.
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